IMC Taxation Practice Test 2025 – Complete Exam Prep

UK residents who are non-UK domiciled are subject to specific taxation rules primarily associated with their residence and domicile status. The correct answer indicates that these individuals are taxed on UK income and foreign income, but the extent of taxation on foreign income can vary based on whether it is remitted to the UK.

For UK income, non-UK domiciled residents are taxed in the same way as UK domiciled individuals – on all income generated within the UK, without exceptions. This includes income from employment, rental income from properties located in the UK, and any other sources derived from within the UK.

Regarding foreign income, non-UK domiciled residents benefit from a remittance basis of taxation. This means they are only taxed on foreign income to the extent that it is brought (or "remitted") into the UK. If they keep their foreign earnings outside of the UK, they may not be subject to UK tax on that income. However, if the foreign income exceeds a certain threshold or the individual opts out of the remittance basis, they may then be taxed on their worldwide income.

This nuanced taxation model allows non-UK domiciled residents a degree of flexibility that reflects their global financial activities, leading to the correct choice being that they are taxed